Forfaiting

Discounting of the client's receivables due in the future by the bank.

Forfaiting is intended for:

• entrepreneurs
• natural persons and corporate  entities
• clients authorised to do business in the Czech Republic
• clients who actively do business
• clients with a tax liability in the Czech Republic
• clients who can be loan recipients pursuant to the pertinent legal regulations
• clients who supply their goods, services or construction work with deferred payment

Characteristics of Forfaiting:

• assignment to KB for consideration of a client's receivables due in the future, which were created in the framework of commercial transactions
• purchase of receivables without recourse to the original owner (usually the supplier)
• can be implemented in two ways:
  • at the risk of the banking entity
    • bill of exchange or promissory note, with the aval of the bank
    • documentary letter of credit
  • at the risk of the commercial entity (debtor – customer)
    • invoice
    • bill of exchange without the aval of the bank
• the following receivables are discounted:
  • short-term
  • medium-term
  • long-term (depending on the level of risk assumed and the nature of the receivable)
• minimum maturity: 45 days
• lower value limit of receivables discounted: approx. CZK 1 million, or the equivalent of this amount in foreign currency
• the price for discounting is set individually and especially depends on the following:
  • the financial standing of the debtor
  • the value, maturity and nature of the receivable
  • all fees are usually deducted from the amount paid at the moment the receivables are purchased

The functioning of Forfaiting can be seen on the following diagram.

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